In the basic economic order quantity (EOQ) model, if monthly demand is a constant 430 units, the order quantity is 144 (12 dozen), and the firm operates during fifty five-day weeks a year, the cycle time will be approximately:
A)7 working days.
B)7 calendar days.
C)84 working days.
D)cannot be determined with the data provided.

Question

Quizplus · Accepted Answer

The EOQ formula is: 
Q = sqrt((2DS)/H)
where Q is the order quantity, D is the annual demand, S is the setup cost per order, and H is the holding cost per unit per year.

Plug in the given values:
Q = sqrt((2*430*144)/0)
Q = 144

The cycle time is the time between orders, which is the order quantity divided by the demand per day:
Cycle time = Q / (D/365)
Cycle time = 144 / (430/365*55)
Cycle time ≈ 7 working days (rounded to the nearest day)

In the Basic Economic Order Quantity (EOQ) Model, If Monthly